After discovering an MRI would cost $1,200, Gajendra Singh, a gastroenterologist, decided to open his own imaging center in Winston-Salem, North Carolina, with MRI prices as low as $500—but a state law is proving to be a major obstacle, Dylan Scott writes for Vox.
What are CON laws
Like several other states, North Carolina has certificate of need (CON) law, which requires a medical provider to obtain government permission to offer new services or buy new equipment, Scott writes. As part of the approval process, state officials determine whether there's a need for the proposed service in the area. If state officials determine there isn't a need, providers can't apply for a permit. If a provider is allowed to apply for a permit, nearby providers can contest the application.
According to Scott, CON laws first emerged about 40 years ago and were intended to give state regulators oversight over new health care providers. Congress in 1974 passed a law that incentivized states to pass CON laws by tying them to federal funding. According to Scott, at one point, 49 states had CON laws in place. However, Scott writes that over time lawmakers and policy experts determined that the laws protected hospitals from competition.
Congress in 1986 repealed its CON endorsement, and since then, 14 states have repealed their own laws. North Carolina's law is still in place.
Singh in July filed a lawsuit North Carolina Superior Court seeking to overturn the state's CON law. In his lawsuit, Singh noted that the law prevented him from buying a permanent MRI machine. Instead, he's had to rent a mobile MRI machine twice a week to provide his patients with MRIs—which, over time, will cost him more than a permanent machine, as he's forced to turn patients away.
Singh's lawsuit argues that the state's CON law is unconstitutional because the North Carolina Constitution bans monopolies and the CON law in effect facilitates them by making it difficult for competitors to open up shop.
The lawsuit argues that the CON law prevents Singh from getting a permanent MRI machine "solely because incumbent providers got there first," therefore violating the state constitution. The lawsuit also alleges the CON law violates Singh's right to equal protection under the law.
Nicholas Bagley, a health law professor at the University of Michigan, said these laws may have made sense back when they first were implemented, as health care was treated more like a utility. Today, however, they're outdated an "impose red tape," Bagley said. "The fact that they're still on the books in two-thirds of the states is a testament to the political power of entrenched players."
However, Don Taylor, a health policy professor at Duke University, raised concerns about fully eliminating the state's law. He said that North Carolina's law could be found anticompetitive specifically when it comes to MRIs, but completely scaling back the law could spur unnecessary scans
North Carolina Gov. Roy Cooper (D), the state health department, the state legislature's leaders, and the North Carolina Healthcare Association, a hospital lobbying group in the state, either did not reply to Vox's requests for comment or declined to comment on the litigation (Scott, Vox, 7/31).
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